The introduction of the European Payment Services Directive, the PSD2, in January 2018 changed the world of marketplaces dramatically. Directly affected by the PSD2, marketplaces had no choice but to adapt to the new regulations. Find out how.
What is PSD2?
The PSD2 aims to create a seamless European market by increasing the security of online payments, while encouraging innovation and competition amongst payment providers. The EU Payment Services Directive came into force on 13 January 2018 and comprises several elements aimed primarily at reinforcing consumer rights:
- Reducing the customer excess in the event of fraudulent card payments, before cancellation. This excess used to be 150 euros, but is now 50 euros.
- Faster payment times and an unconditional right to a refund for direct debits in euros
- Banning overcharging: it is no longer possible to charge the consumer a surcharge when paying by debit or credit card, in-store or online.
Other provisions came into force on 14 September 2019:
- Opening up the market to new participants by giving access to information on various accounts via a secure communication channel.
- Mandatory use of strong authentication for online payments of over 30 euros, to reinforce the payment verification system and reduce fraud. Strong authentication consists of asking for two out of three types of identification: something you know (password, PIN code), something you have (smartphone, computer), and something you are (fingerprint, voice recognition). Although this obligation came into force on 14 September 2019, in reality the Banque de France is still implementing its migration plan for effective strong authentication in early 2020.
If a marketplace receives funds from customers and passes them on to merchants, its activity is treated as “provision of payment services” and is covered by the PSD2.
Also read > PSD2: key points in a regulation full of surprises
PSD2: 3 ways for marketplaces to comply with regulations
There are three possible ways that platforms can comply with European legislation:
- Obtain accreditation from the ACPR. If you want to manage your payments yourself, you will need to obtain payment institution accreditation from the French Prudential Supervision and Resolution Authority (ACPR). This lengthy and complex procedure is designed for companies that have the time and internal resources to carry out the extensive compliance work required by the regulations.
- Apply for exemption from accreditation. In rare cases, it is possible to be exempted from APCR accreditation. This option is only available to marketplaces with a “limited range of products and services” or “for a limited number of people”. The ACPR is the sole assessor of these criteria.
- Use a Payment Service Provider (PSP). This is the preferred solution for the majority of marketplaces. The PSP is itself ACPR accredited and is responsible for providing a payment interface for customers, managing capital control and transferring funds to merchants. Outsourcing the provision of payment services is quick and easy and also allows for simpler cross-border transactions, as the PSP may have a European passport. This passport allows the PSP to carry out its activities throughout the European Union by its accreditation being valid in all EU countries.
As an accredited Payment Service Provider, Lemonway enables you to comply with the PSD2, while focusing on your core business and without the need to develop technical and regulatory expertise in-house.